Whitespace before xsl:param|xsl:sort
The Saxon XSLT and XQuery processor, developed by Saxonica
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mhkay
Section 4.2 rule 5 specifies that whitespace text nodes in the stylesheet that precede an xsl:param or xsl:sort element should be ignored even if xml:space="preserve". Saxon is not doing this - the text nodes are treated as if they appeared after the xsl:param/xsl:sort element.
A patch is being placed in subversion (momdule net.sf.saxon.style.StyleElement)
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Fixed in 9.0.0.2